More investigations into ObamaCare state exchanges are needed

It has been five years since the Affordable Care Act, better known as ObamaCare, was signed into law. The disastrous rollout of the federal marketplace website, Healthcare.gov, is well-known. According to a Bloomberg Government analysis released in September 2014, the cost of Healthcare.gov was more than $2 billion, more than twice the Obama administration’s estimates. Appropriately, the federal marketplace has been a subject of numerous congressional hearings.

But state-run websites have also squandered hundreds of millions of federal tax dollars. While the House Committee on Oversight and Government Reform has been investigating some of the problems with state-run websites, much more can and should be done. Every House and Senate committee that oversees healthcare issues should carefully examine the roles played by the Centers for Medicare and Medicaid Services (CMS), state officials and contractors in the design and implementation of the websites.

{mosads}Examples of costly and/or failed exchanges include those of the District of Columbia, Hawaii, Maryland, Massachusetts and Vermont. However, the poster child for a failed state exchange is Oregon, and it deserves special scrutiny by Congress.

In the fall of 2012, Oregon’s exchange was “leading the nation,” according to Carolyn Lawson, chief information officer for the Oregon Health Authority and the Department of Human Services. In May 2013, Sarah Kliff of The Washington Post declared that Oregon’s online marketplace may be “the White House’s favorite health [e]xchange.” Yet two months after the Oct. 1, 2013 open enrollment began, Cover Oregon was an object of ridicule. According to CMS, the exchange cost taxpayers more than $305 million. Cover Oregon was closed in April 2014 and the state is utilizing the federally facilitated exchange.

Now there is evidence emerging that election politics may have played a role in the demise of Cover Oregon. According to two Oregon-based news reports in February 2015, disgraced former Gov. John Kitzhaber (D) tried to have his personal emails removed from the state’s servers, but state officials refused to do so. It was later discovered that the emails show the governor surreptitiously hired his chief campaign consultant, Patricia McCaig, the self-described “Princess of Darkness,” to oversee Cover Oregon in February 2014. The emails show that McCaig and other campaign consultants were deeply involved in shaping official state news about Cover Oregon and in discussions about whether to settle a dispute with Oracle, the prime vendor for the website, or sue the company.

Indeed, lawsuits between Oracle and the state are flying back and forth over the exchange’s catastrophic collapse. Oracle is seeking unpaid fees and claiming defamation and copyright infringement. The company is also accusing Kitzhaber’s former political consultants of interfering with the website, and this claim seems to be supported by emails that show McCaig, among others, based management decisions on polling and how voters’ views of Cover Oregon would impact the governor’s reelection campaign. The state is accusing Oracle of substandard performance and racketeering.

Taxpayers need to know what exactly happened in Oregon and why, as well as how other state exchanges have cost more than expected and worked far less effectively than advertised. Since the ACA requires state exchanges to be self-sufficient by January 2015, it would also be interesting to learn how much the purported “successful” websites are costing taxpayers to run and maintain.

For example, Colorado and Rhode Island are already considering switching to the federally run exchange because of financial problems. The information gathered at oversight hearings will help the 27 states that wisely decided not to establish an exchange in the first place determine whether to establish one in the future.

Schatz is president of Citizens Against Government Waste.